March 29th, 2011 
Jonathan Dionisio 
Despite record-low new home sales and the decline of residential construction, the construction industry is still demonstrating its strength and viability. A report shows that merger and acquisition (M&A) deals in the engineering and construction industry made in 2010 were greater than 2009 deals.
According to the PricewaterhouseCoopers (PwC) US report, M&A deal activity in the global engineering and construction (E&C) sector showed continued improvement in 2010. Total annual deal volume for deals valued at $50 million or more increased from 139 in 2009 to 161 in 2010, while deal value increased from $42.1 billion in 2009 to $68.6 billion in 2010. On the other hand, M&A transactions of $1 billion or more, called mega-deals, more than doubled from 2009, contributing to the overall increase in deal value.
“As expected, buyer activity continued building momentum as average deal values exceeded those in 2009,” said Kent Goetjen, US engineering and construction industry leader at PwC. “Interestingly, despite debt woes in Europe and persistent high levels of unemployment in the US, the engineering and construction sector remained optimistic, ” he added.
Improving conditions have encouraged financial investors to return to make deals after several quarters of declining participation. As the report suggests, “Although financial leverage has remained flat, cash on hand has increased, giving many companies a strong position for future acquisitions.”
During the fourth quarter of 2010, targets classified as construction and nonmetallic minerals manufacturing were the primary categories driving activity, contributing more than half of the quarter’s deal volume. Although down from Q3, acquisition of home building businesses for sale remained relatively strong, which may indicate buyers are positioning themselves for a potential increase in demand for residential real estate in the near future. There was an increase in civil engineering targets which may indicate buyers are also anticipating an increase in nonresidential and infrastructure construction.
Currently Corporations4Sale represents several companies involved in these areas:
- Cellular Telecom Service
- Union Mechanical Contractor
- Water Well, Drilling & Pump Services
- Turnkey Construction Contractor – Wireless Towers
- Integrated/Low-Voltage Cabling Contractor
- HVAC and Sheet Metal Fabrication
- Building Products Sales and Distribution
- Commercial Plumbing Contractor
- Highway Maintenance & Traffic Control
- Electrical Contracting & Service Firm
- Natural Gas Pipeline Construction
- Heavy Civil Construction Contractor
- Specialty Mechanical & Piping Contractor
Historically, E&C companies have turned to acquisitions to achieve targeted growth rates, improve technical competencies, and increase geographic reach. With this, we believe that more engineering and construction businesses will be sold throughout 2011. Although some buyers may still have lingering concerns on the stability and profitability of the industry, this report and the ongoing M&A activities in the market prove that engineering and construction businesses are still strong acquisition opportunities.
Sources:
http://www.pwc.com/us/en/industrial-products/publications/engineering-growth.jhtml
http://www.pwc.com/us/en/press-releases/2011/global-engineering-and-construction-sector.jhtml
http://www.constructionweekonline.com/article-11419-construction-ma-activity-rises-globally-in-2010
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